State orders new car insurance ‘stimulus checks’ — are you due another refund?

While Washington stopped entertaining the idea of a fourth stimulus check, advocates and at least one state are still pushing car insurance companies to hand you some COVID-19 cash.

Some insurers paid discounts and rebates to policyholders when they reaped soaring profits as Americans stayed home more during the Great Driving Slowdown in 2020. Yet government officials, advocacy groups and a class-action lawsuit argue it wasn’t nearly enough.

If you're paying full price, here's how you might get another discount from your insurer — plus some other strategies to slash your monthly bill.

This state is ‘out of patience’ with car insurersddisq / Shutterstock

California’s insurance chief recently issued a stark warning to three auto insurance companies: reimburse consumers for excess premiums since the beginning of the pandemic or face legal action.

The companies have a month to explain their plans, under the order by Insurance Commissioner Ricardo Lara.

“On behalf of consumers, I am out of patience,” Lara says in a statement. “These insurance companies have 30 days to tell us once and for all how they are going to make it right before we take further action.”

The insurers targeted by the order had the largest gaps between the amount they refunded drivers and the amount they should have paid back, the Insurance Department says.

The companies cover 1 in 5 California drivers: Allstate Northbrook Indemnity Co., Mercury Insurance Co. and CSAA Insurance Exchange.

A state analysis found that insurers returned an average of 9% of auto premiums from March to September 2020, but the Insurance Department estimates they should have refunded nearly double that amount — 17% — over the seven-month period.

Car insurers under siege for more rebatesPascal Vosicki/Shutterstock

During the worst of the pandemic, driving dropped well below pre-COVID levels, meaning fewer accidents and big profits for auto insurers.

Progressive reported an 82% increase in net income, while Geico’s pretax earnings tripled during the second and third quarters of 2020.

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In recognition, insurance providers voluntarily gave out more than $14 billion in refunds and credits last year, the American Property Casualty Insurance Association says.

But even as conditions on the roads return to normal, the fight rolls on for auto insurance relief to recover more of what California calls an unearned windfall for the companies.

Beyond California’s order for more refunds, Washington and New Mexico are taking initial steps, and Massachusetts Attorney General Maura Healey has sent several pointed letters to the state's insurance regulator.

The conflict ended up in the courts with multiple class-action lawsuits filed this year in Nevada and Illinois.

For its part, the American Property Casualty Insurance Association — the primary trade association for auto insurers — denounced the Nevada class action as “litigation profiteering.”

So can I get free money from my insurance company?Amy K. Mitchell / Shutterstock

Unless more regulators step in or the class-action suits succeed, insurers won’t be forced by law to hand out more money than they already have.

Most rebates provided last year were minimal; it was rare to get back more than half a month’s premium. On average, advocacy groups say, insurers shortchanged policyholders $125 per vehicle.

But some companies didn’t issue refunds or cut rates at all unless customers called and asked.

If you haven’t contacted your insurer yet, you might have free cash waiting for you. And with pressure mounting, your provider might be open to reviewing your premium, especially if you’re still driving less than ever.

If your insurance company won’t give you a pandemic discount, you can try a couple ways to cut your insurance bill.

Drop optional coverage

Some auto insurance policies include extras that you may be able to do without for a while. For example, can you cut out the option that pays for a rental car while yours is at the repair shop?

Removing these extras can save you a few bucks. Just make sure you’re still meeting your state’s minimum liability coverage and are protected in case of an accident during those trips to the grocery store.

Switch insurance providers

If your insurer won’t give you a break, maybe you can find a new one that will. If you haven’t done any comparison shopping over the last six months, you could be overpaying by more than $1,000 per year.

With a free quote-comparing service, you could find the best price in minutes.

What if I need even more savings?Prostock-studio / Shutterstock

If saving on car insurance isn’t enough, here are a few more ways to give your bank account a boost until the economy bounces all the way back.

  • Slash your other insurance bills. By doing some simple comparison shopping using online tools, you can save hundreds on your homeowners insurance and get an instant life insurance quote.

  • Cut the cost of your debt. If you’ve relied on credit cards throughout the pandemic, expensive interest is bound to catch up with you. A lower-interest debt consolidation loan can fold your balances into a single, lower-interest payment — and help you find freedom from your debt sooner.

  • Invest your spare change. Using a popular investing app, you can automatically invest the “change” left over from everyday purchases. The money goes in a diversified portfolio of stocks, bonds and other reliable investments. You won't even notice the deposits as you build or round out your investing plan.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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